Executive Summary / Key Takeaways

• RE/MAX Holdings, a global real estate franchisor, is strategically transforming its business model by integrating advanced technology and flexible agent programs to enhance its value proposition and diversify revenue streams, moving beyond traditional fee structures.
• The company's Q3 2025 results demonstrated resilience with profit at the high end of expectations and improved Adjusted EBITDA margins, driven by diligent expense management and early returns from new initiatives, despite a challenging housing and mortgage market.
• Key technological differentiators like the AI-powered Marketing as a Service (MaaS) platform, Lead Concierge, and the Aspire agent onboarding program are designed to boost agent productivity, recruitment, and retention, with MaaS and RE/MAX Media Network expected to contribute significant new revenue.
• With its Total Leverage Ratio (TLR) now below 3.5x, RE/MAX Holdings has increased capital allocation flexibility, making share repurchases an attractive option given the current stock valuation, while strategic reinvestment in the business remains a priority.
• The company's outlook for full-year 2025 anticipates agent count growth of 0% to 1.5% and Adjusted EBITDA between $90 million and $94 million, reflecting pragmatic adjustments to macro uncertainties and the ramp-up period for new initiatives.

A Legacy of Franchising Excellence Meets a New Era of Innovation

RE/MAX Holdings, Inc. (NYSE:RMAX), founded in 1973, has built a formidable presence as one of the world's leading franchisors in the real estate industry. Its foundational strategy, rooted in an innovative, entrepreneurial culture, has consistently empowered agents and franchisees with significant operational independence. This model has enabled RE/MAX to maintain a relatively low fixed-cost structure and generate primarily recurring, fee-based revenue, contributing to historically high margins and robust cash flow. The company's global footprint is unmatched, with a presence in over 110 countries and territories, and its international agent count has more than doubled since 2017, surpassing 70,000 agents outside the U.S. and Canada by the end of 2024.

The real estate industry currently faces a period of significant transition and uncertainty, marked by persistently high mortgage rates, affordability challenges, and a slower-than-anticipated recovery in U.S. existing home sales. Inventory levels, however, are showing constructive signs, with U.S. housing inventory increasing 20% over September 2024, marking the 21st consecutive month of year-over-year growth. New listings also rebounded in September 2025, growing 4.5% over August. Amidst these dynamics, industry consolidation is creating both challenges and opportunities for established players like RE/MAX. The company's strategic response has been to lean into its core strengths while aggressively pursuing innovation to enhance its value proposition and diversify its revenue streams.

Technological Edge: Fueling Agent Productivity and New Revenue Streams

RE/MAX Holdings is actively leveraging technology to solidify its competitive moat and drive future growth. The company's core technology ecosystem is designed to empower its vast network of agents and brokerages. A cornerstone of this is the BoldTrail platform, which integrates a suite of digital products enabling agents, brokers, and teams to establish, manage, and grow client relationships. Complementing this is the RE/MAX University platform, a comprehensive learning hub providing world-class education to enhance agent professional expertise. Agents who utilize the Max/Tech platform, which includes these tools, are notably nearly twice as productive as those who do not, a tangible benefit that underscores the platform's effectiveness.

Recent innovations underscore a strategic shift towards AI-powered, data-driven solutions. The Marketing as a Service (MaaS) platform, launched in Q3 2025, is an AI-fueled system that simplifies marketing efforts for affiliates across the U.S. and Canada. It consolidates various marketing tools, offering automated listing packages, customizable ad programs, and real-time analytics. This platform aims to help agents win more listings, save time, and build more profitable businesses by providing a lower cost for agents and more effective marketing. Initial engagement with MaaS has been promising, with increasing orders and users, and the company plans to expand it into international geographies to capitalize on its global footprint and diversify revenue. Management anticipates MaaS will contribute a "high single-digit, low double-digit margin contribution," a different profile from the core business.

Further enhancing its digital capabilities, the Lead Concierge program has been outperforming expectations, connecting high-intent leads from remax.com and remax.ca with agents, converting curated leads into sales. The RE/MAX Media Network, which provides high-quality advertisements on the company's heavily trafficked websites, is on track to achieve a seven-digit revenue contribution by the end of 2025 and is expected to have a "higher than normal margin profile." Additionally, the company introduced MAX/Engage, a social influencer platform, and MAX/Refer, an AI-powered global referral system, to simplify cross-border referrals and amplify brand presence. These technological advancements are not merely incremental improvements; they are foundational to RE/MAX's strategy of expanding and modernizing its products and services, creating new competitive advantages, and diversifying its top-line drivers.

Financial Performance and Operational Discipline

RE/MAX Holdings has demonstrated remarkable financial resilience amidst a challenging market backdrop. For the third quarter ended September 30, 2025, the company reported total revenue of $73.3 million, a 6.7% decrease from the prior year. Revenue excluding Marketing Funds, a non-GAAP measure, decreased 5.6% to $55.1 million, primarily driven by a 5.4% decline in organic revenue and 0.2% adverse foreign currency movements. This organic decline was largely attributed to a lower U.S. agent count and the initial impact of incentives from new fee models like the Aspire program. Despite top-line pressures, the company's Adjusted EBITDA for Q3 2025 was $25.8 million, a 5.6% decrease year-over-year, but its Adjusted EBITDA margin increased by 40 basis points to 35.2%, reflecting strong operational efficiency.

The company's focus on expense management has been a consistent theme, with selling, operating, and administrative expenses decreasing by $3.5 million (9.7%) to $32.5 million in Q3 2025. This reduction was primarily due to lower personnel and events expenses, partially offset by increased investments in technology, its flagship website, bad debt, and legal fees. For the nine months ended September 30, 2025, Adjusted EBITDA was $71.3 million, a decrease of $3 million from the comparable prior year period, primarily due to lower revenue from U.S. agent count declines and increased technology investments. However, the company's cash-generative nature is evident, converting approximately 60% of Adjusted EBITDA to adjusted free cash flow in Q3 2025.

The mortgage segment, operating under the Motto Mortgage and wemlo brands, continues to face a challenging market, with total open Motto Mortgage offices decreasing by 10.3% to 210 in Q3 2025. Revenue for the segment decreased 9.46% to $3.387 million in Q3 2025 and 8.11% to $10.155 million for the nine months ended September 30, 2025. Despite this, Adjusted EBITDA for the mortgage segment increased to $1.304 million in Q3 2025 from $1.120 million in Q3 2024, and to $4.482 million for the nine months ended September 30, 2025, from $3.962 million in the prior year. The appointment of Vic Lombardo as President of Mortgage Services in Q3 2025 signals a renewed strategic focus on this segment, with plans to evolve its offerings and potentially shift to a more variable financial model.

Competitive Landscape and Strategic Positioning

RE/MAX Holdings operates in a highly competitive real estate services market, contending with both traditional franchisors and technology-driven disruptors. Key direct competitors include eXp World Holdings , Anywhere Real Estate , Redfin , and Zillow Group .

RE/MAX's competitive advantages are deeply rooted in its strong brand recognition and unmatched global network. The company consistently highlights its agents as the "most trusted, professional, and productive" in the business, with RE/MAX agents at large brokerages outperforming competitors by a margin of more than 2:1 for 17 consecutive years. This productivity translates into higher customer loyalty and recurring revenue from franchising fees. The recent conversion of Better Homes and Gardens Real Estate Advantage Realty into RE/MAX Hawaii, adding over 170 agents, further solidified RE/MAX's market share, catapulting it to a #2 position in the state.

Compared to eXp World Holdings (EXPI), a cloud-based brokerage, RE/MAX offers a more traditional franchising model with strong in-person training via RE/MAX University, complemented by digital tools. While EXPI's virtual model may offer greater efficiency in scaling operations and faster adaptation to digital trends, RE/MAX's emphasis on brand loyalty and comprehensive agent support provides a more established market positioning. RE/MAX's gross profit margin of 55.95% and EBITDA margin of 18.68% (TTM) reflect a stable, recurring revenue model.

Against Anywhere Real Estate (HOUS), which boasts a broad portfolio of brands, RE/MAX differentiates itself through specialized digital tools and a focused strategy on agent-centric education and global expansion. While HOUS leverages its larger portfolio for broader domestic coverage, RE/MAX's offerings provide materially greater efficiency in agent training, potentially leading to stronger operational execution.

When compared to technology-driven brokerages like Redfin (RDFN) and digital marketplaces like Zillow Group (Z), RE/MAX's agent-centric model emphasizes personalized brokerage services. While Redfin and Zillow prioritize seamless online experiences and data-driven platforms, RE/MAX's strength lies in its global reach and agent loyalty. The company's strategic investments in AI-powered tools like MaaS and Lead Concierge are aimed at bridging any technological gaps and enhancing its digital competitiveness without abandoning its core agent-support philosophy. RE/MAX's P/E ratio of 6.56 (TTM) and P/S ratio of 0.53 (TTM) suggest a potentially undervalued position relative to its established market presence and cash-generative model.

The company's stance on industry policy, such as the National Association of Realtors' (NAR) Clear Cooperation Policy, emphasizes transparency and the broadest distribution of listings, aligning with the best interests of most buyers and sellers. This position, while potentially differing from some competitors, reinforces RE/MAX's long-term commitment to consumer and agent experience.

Outlook, Guidance, and Capital Allocation

RE/MAX Holdings' outlook for the remainder of 2025 reflects a blend of cautious optimism and strategic execution. For the full year 2025, the company expects total agent count to increase by 0% to 1.5% over full year 2024. Revenue is projected to be in the range of $290 million to $294 million, including Marketing Funds revenue of $72 million to $74 million. Adjusted EBITDA is guided to be between $90 million and $94 million. This guidance represents a tightening of the top end of previous ranges, a pragmatic adjustment based on continued macroeconomic uncertainties and a slower-than-anticipated ramp-up of certain new initiatives, such as the RE/MAX Media Network.

The underlying assumptions for this outlook include no further currency movements, acquisitions, or divestitures. Management acknowledges the persistent challenges in the housing and mortgage markets, including high mortgage rates and affordability issues, which temper expectations for a significant market rebound. However, the company is encouraged by the growing excitement within its network and the early returns from strategic initiatives like the Aspire program, which, despite being a "short-term investment cycle" with initial revenue headwinds, is driving increased recruitment and higher retention rates for newer agents.

From a capital allocation perspective, RE/MAX Holdings' priorities remain strategic reinvestment in the business and building cash reserves. The company's Total Leverage Ratio (TLR) decreased to 3.41:1 as of September 30, 2025, falling below the 3.5x level. This deleveraging provides greater flexibility for capital allocation, including unrestricted restricted payments such as dividends and share repurchases.

Management views repurchasing shares as an "attractive use of capital" at the current price, given the achieved deleveraging. While the quarterly dividend remains suspended since Q4 2023 due to litigation settlements and market conditions, future capital allocation decisions will be at the Board's discretion, considering various factors. The company has an authorized common stock repurchase program of up to $100 million, with $62.5 million remaining as of September 30, 2025.

Risks and Challenges

Despite its strategic advancements, RE/MAX Holdings faces several pertinent risks. The company is exposed to foreign currency transaction risks, particularly from the Canadian dollar, and interest rate risk due to variable-rate borrowings under its Senior Secured Credit Facility (6.80% interest rate as of September 30, 2025). A hypothetical 0.25% increase in this rate could lead to an additional $1.1 million in annual interest expense. Credit risk from franchisee receivables is also a factor, managed through quarterly reviews and potential franchise termination for significant delinquencies.

Ongoing litigation, including the U.S. settlement of $55 million for Moehrl-related antitrust litigations and the Canadian settlement of $7.8 million CAD, presents a degree of uncertainty. If these settlements are not upheld on appeal, the company could face additional litigation with an unquantifiable financial impact. The challenging broader macro and housing environment continues to impact the company's total leverage ratio and makes future forecasting difficult. The slower-than-anticipated ramp-up of new initiatives like the RE/MAX Media Network, partly due to reduced advertising spend in a tough macro environment, could also affect revenue growth. The mortgage market remains particularly challenging, and consistent revenue growth in this segment may take several more quarters.

Conclusion

RE/MAX Holdings stands at a pivotal juncture, leveraging its enduring franchising model and global leadership to adapt to a dynamic real estate landscape. The company's strategic pivot towards technological innovation, exemplified by its AI-powered Marketing as a Service platform and agent-centric programs like Aspire, is designed to enhance agent productivity, drive recruitment, and diversify revenue streams. Despite facing a challenging housing market and ongoing litigation, RE/MAX has demonstrated strong operational discipline, consistently improving profitability and cash flow, which has enabled it to reduce its leverage and gain greater capital allocation flexibility.

The investment thesis for RE/MAX Holdings is underpinned by its resilient franchise model, its commitment to technological leadership to empower its highly productive agent network, and its disciplined financial management. While macroeconomic headwinds and the ramp-up period for new initiatives present near-term challenges, the company's strategic investments in technology and agent support, coupled with its strong competitive positioning and global footprint, position it for sustained long-term growth. Investors should closely monitor the adoption and monetization of new technology platforms, the stabilization and growth of U.S. agent count, and the strategic evolution of its mortgage business as key indicators of its continued success in an evolving industry.